From US to China and much more
Rising public raises concerns, while military spending rises. Wealth taxes on billionaires? Impact of challenging US dollar as the reserve currency? Meanwhile, a 5,000-year-old industrial hub emerges
Rise of public debt in US & China a concern?
The International Monetary Fund (IMF) has highlighted the persistent increase in public debt, particularly in the world's leading economies, namely China and the United States.
According to the IMF, if current trends persist, the public debt in these two nations could potentially double by 2053.
Despite a temporary decline observed during 2021-2022, global public debt rebounded last year, surpassing pre-pandemic levels by 9% of gross domestic product (GDP).
Projections indicate that global public debt is on track to reach approximately 99 percent of GDP by 2029, largely propelled by escalating debt levels in China and the US.
The IMF warns that the continuation of loose fiscal policies in the US may pose challenges in achieving the final stages of disinflation.
In China, persistent deficits in the primary budget are expected to contribute to the ongoing increase in public debt, exacerbated by labor market challenges and ongoing issues in the property sector.
The IMF's report underscores a fiscal decline in the US during 2023, with the general government fiscal deficit soaring to 8.8 % of GDP from 4.1 % in 2022.
Similarly, China's fiscal deficit remained above 7 percent of GDP in 2023 and is anticipated to gradually climb to around 8 percent by 2029. However, the ongoing downturn in the Chinese property sector continues to pose a significant obstacle to economic growth.
Rise in military spending across the globe
In the year 2023, there was a significant surge observed in the global military expenditure, amounting to a total of $2443 billion, which marked an increase of 6.8 percent in real terms when compared to the preceding year.
This rise signified the most substantial year-on-year escalation witnessed since 2009.
Noteworthy within the 31-member NATO alliance was the collective allocation of $1341 billion towards military spending in 2023, constituting 55 percent of the overall global military expenditure.
Particularly, the United States, a pivotal member of NATO, witnessed a 2.3 percent climb in its military expenditure, reaching $916 billion in 2023, thereby accounting for 68 percent of NATO's total military spending.
Across Europe, the majority of NATO members observed an increase in military expenditure in 2023, collectively contributing 28 percent to NATO's overall expenditure, marking the highest share recorded in a decade.
Russia notably displayed a significant rise in military spending, experiencing a 24 percent increase to an estimated $109 billion in 2023. This surge marked a 57 percent escalation since 2014, coinciding with the annexation of Crimea by Russia.
Ukraine emerged as the eighth-largest military spender in 2023, witnessing a remarkable surge of 51 percent in military expenditure, reaching $64.8 billion. This amounted to a military burden of 37 percent and constituted 58 percent of the total government spending.
China, being the world's second-largest military spender, allocated an estimated $296 billion to its military in 2023, marking a 6.0 percent increase from the previous year.
Meanwhile, Japan and Taiwan both experienced an 11 percent growth in military expenditure, reaching $50.2 billion and $16.6 billion, respectively.
Israel's military spending also experienced a notable increase of 24 percent, reaching $27.5 billion in 2023.
Similarly, India emerged as the fourth-largest military spender globally, with military expenditure totaling $83.6 billion, representing a 4.2 percent increase from the previous year.
World’s billionaires should pay minimum 2% wealth tax?
Ministers representing four major economies have proposed the implementation of a minimum 2% tax on the burgeoning wealth of the world's 3,000 billionaires, aiming to generate £250 billion annually to address poverty, inequality, and climate change on a global scale.
This suggestion, endorsed by Brazil, Germany, South Africa, and Spain, underscores a growing international consensus favoring a levy targeting the ultra-wealthy, viewed as a means to mitigate inequality and bolster public finances.
Economist Gabriel Zucman, hailing from France, is currently refining the technical aspects of a framework intended to realize this proposal, with further deliberations slated within the G20 forum come June.
The persistence of loopholes within existing taxation systems allows high-net-worth individuals to significantly reduce their tax obligations, with global billionaires reportedly remitting a mere fraction, approximately 0.5%, of their wealth in personal income taxes.
Addressing this issue necessitates proactive measures to counter the utilization of tax havens, a critical component in ensuring the efficacy of any such tax initiative.
Can you dethrone US Dollar as the defacto world’s reserve currency?
Economic strategists from the administration of former President Donald Trump are actively exploring measures to thwart the trend of nations transitioning away from utilizing the US dollar, in response to emerging initiatives among key developing economies to diminish reliance on the American currency.
Discussions entail contemplating repercussions for both allies and adversaries that actively pursue bilateral trade utilizing currencies other than the dollar.
Potential actions under consideration include the imposition of export controls, allegations of currency manipulation, and the imposition of tariffs.
Criticism of the dominant position of the dollar in the global financial landscape gained momentum in 2022, particularly following the United States' lead in imposing stringent economic sanctions on Russia, a prominent member of the Group of 20 nations.
As a result, Russia's central bank, governmental officials, and approximately 2,500 other entities have faced limitations on their access to the dollar.
The concept of de-dollarization was deliberated among the BRICS nations—Brazil, Russia, India, China, and South Africa—at a summit held last August.
This group has been gaining influence on the global stage, notably expanding its membership to include key oil-producing countries such as Saudi Arabia and the United Arab Emirates.
Both Saudi Arabia and the UAE presently peg their currencies to the dollar.
During discussions among economic advisers to Trump and his campaign, attention has been directed towards addressing the aforementioned BRICS initiative, particularly in the context of a potential second presidential term.
Authorities in Japan and South Korea have cautioned against excessive fluctuations in their respective exchange rates, with Tokyo officials emphasizing their prerogative to intervene when necessary.
5000-year-old industrial manufacturing hub discovered in Binjor excavations
Reputed for their roles as pioneers in exploration and trade, the Harappans emerged as a prominent mercantile community within the ancient Indian landscape during the third millennium BCE, approximately 5000 years in the past.
Beyond their recognition as traders, the populace of the Harappan Civilization also exhibited prowess in production. The cohesive framework of supply, manufacturing, and dissemination interconnected regions spanning from the Makran coast in the west to the Yamuna River in the east, and from the Himalayas to western India.
The advent of trade spurred the initial wave of urbanization, enduring for six to seven centuries before the eventual collapse of cities.
The methods of production adopted by the Harappans remain as intriguing and captivating as their extensive long-distance trade networks.
The mastery of crafting high tin bronze utilizing the age-old lost wax technique, the ancient art of bead making (lapidary) spanning over millennia, the finesse in pottery production, and the textile industry, particularly in cotton, all highlight techniques and practices that have not only distinguished the Harappans but have also positioned contemporary India as a prominent hub for the production of cotton, beads, and copper artifacts.
In the vicinity of Tarkhanwala Dera and Baror, near Binjor (4MSR), the unearthing of a village inhabited by artisans shed light on the livelihoods of metallurgists and craftsmen, thereby unveiling previously obscure facets of the Harappan production line.
The notable designation of Binjor (4MSR) as a significant industrial hub along trade routes stems from its functional role within the region.
Evidenced by the discovery of over 250 hearths of various sizes and shapes across seven structural phases, Binjor (4MSR) stood as a prominent industrial center.
The proliferation of hearths and the clustering of fire activity persisting over extended periods, delineated by stratified layers, underscored the escalation in production scale.
Archeological excavations and corroborating scientific data unequivocally indicate the initiation of industrial operations during the Mature Harappan period at the site.
Additionally, findings suggest the abandonment of the site towards the latter part of the Mature Harappan phase, circa 2000 BCE, coinciding with the onset of the de-urbanization phase within the civilization.